FNG v. BCJ

CACV 41/2020

[2021] HKCA 160

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 41 OF 2020

(ON APPEAL FROM HCMP 776/2019)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  This appeal concerns the power of the courts under the Enduring Powers of Attorney Ordinance Cap 501 (“the Ordinance”) regarding the production and auditing of accounts by an attorney upon the death of the donor. As we shall explain below, the statutory power is different in nature from the common law power of the courts to order an account to be rendered by an agent to a principal. The purpose of the statutory power is to facilitate the courts, if circumstances so warranted, to take necessary steps to protect the interest of a principal who is either mentally incapacitated or otherwise vulnerable.

2.  The statutory power to make an order in respect of accounts is set out in Section 11(1)(a) of the Ordinance as follows:

“11. Functions of court in relation to enduring power

(1) The court may on the application of an interested party—

 (a) require the attorney under an enduring power to produce records and accounts and make an order for their auditing;”

3.  The power can be invoked by an interested party who needs not be a person having any claims to the estate of the donor.  As we shall elaborate below, the power is not designed to serve the personal interest of such interested party.  Instead, it empowers the courts to exercise a jurisdiction which is protective in nature in the context of a statutory regime which is aimed at paying due respect to the autonomy of a principal in appointing an attorney to manage his properties.  Such appointment shall continue to be effective despite the loss of mental capacity on the part of the principal at a time after making such appointment.  

4.  In the Court of First Instance, an application for account was brought by a daughter (“the Plaintiff”) of the donor who by an enduring power of attorney of 14 May 2010 (“the EPA”) had appointed another daughter (i.e. the Defendant) as his attorney (“the Attorney”).  The application was made during the lifetime of the donor.

5.  At the hearing of the application on 19 September 2019, Marlene Ng J (“the Judge”) found that the parties were not too far apart and stood down the matter for further negotiations between them.  General consensus was reached and the Judge directed them to put forward a draft order based on their general consensus with any disagreements marked up for the court’s determination.  A draft was submitted accordingly and on 11 October 2019, the Judge made an order (“the First Order”) containing, amongst other things, these terms:

“ 1. [D] shall produce or cause to be produced audited accounts with auditor’s report in respect of the estate of FSF (collectively, “Accounts”) by the Auditor referred to in paragraph 7 below (“Auditor”) (i) for the period from 12 September 2017 until 30 June 2019 and (ii) thereafter on a bi-annual basis for the periods ending 31 December and 30 June in each calendar year;

2. Subject to paragraph 4 below, the Accounts for the period from 12 September 2017 until 30 June 2019 shall be lodged with the Court and served on [P] no later than 21 weeks (or 147 days) from the date of the appointment of the Auditor by the Court;

3. Subject to paragraph 4 below, the Accounts for the accounting periods thereafter shall be lodged with the Court and served on [P] no later than 19 weeks (or 133 days) after the expiry of each accounting period on 31 December or 30 June (as appropriate) in each calendar year;

4. The court may at any time and on its own motion dispense with the lodging of the Accounts with the Court; …”

6.  The First Order also contained detail provisions regarding the mechanism for appointment of auditor and the requirements that the auditor must observe in the auditing process as well as the incidence of the costs and expenses of the audit upon the estate of the donor.

7.  Unforeseen by the court, the donor passed away on 8 November 2019.  At that time, no auditor had yet been appointed.

8.  By operation of law pursuant to Section 13(1)(f) of the Ordinance, the EPA was revoked on the death of the donor.  

9.  The Judge was informed of the demise of the donor by a letter of 11 November 2019 from the solicitors acting for the Attorney.  A hearing was held on 11 December 2019 regarding the implications arising from the death of the donor.  On 30 December 2019, the Judge made an order (“the Second Order”) staying the First Order.

10.  The donor had made a will on 3 September 2013.  The executors named in the will were the wife of the donor, the Attorney and a long-time friend.  The Plaintiff was not one of executors but she was one of the beneficiaries.

11.  By a notice of appeal of 24 January 2020, the Plaintiff brought an appeal against the Second Order and sought an order that the First Order “do stand notwithstanding the death of [the donor] on 8 November 2019”.

12.  Before us, Mr Chan (who did not appear below), counsel for the Plaintiff clarified that the Plaintiff would only seek audited account regarding the administration of the estate of the donor up to the date of death.

13.  In the Decision of 30 December 2019, the Judge gave ten reasons for granting a stay of the First Order:

(a)     Notwithstanding the common position of the parties set out in a joint letter of 28 November 2019 (agreeing that the period to be covered by the accounts should be confined to 12 September 2017 to 8 November 2019), the court was not bound to accept that position;

(b)     The demise of the donor had two legal consequences: (i) the revocation of the EPA; and (ii) what the Judge described as the Live Estate ceased to exist as it had fallen into the Death Estate.  The Attorney qua done under the EPA had no personal capacity and no further power to deal with the properties in the Live Estate though she had a capacity as co-executrix under the will; 

(c)     The First Order was prospective and steps had to be taken or implemented in the future;

(d)     An order made under Section 11(1)(a) of the Ordinance could only require “the attorney under an enduring power of attorney” to take certain future steps;

(e)     The revocation of the EPA upon death must have an impact on the First Order.  With the death of the donor, there was no present attorney who could be called upon to instruct an auditor or to supply the records to such auditor.  The residual authority of the Attorney was to hand over the property and assets of the donor to the executors upon grant of probate and she could not intermeddle in the Death Estate in the meantime.  The First Order did not envisage payment to be made from the Death Estate or by the Attorney in her personal capacity.  It was premised on payment of remuneration to the auditor from the Live Estate;

(f)     Upon death, the Plaintiff had no further right as interested party in respect of the Live Estate.  It was for the executors to collect the property and to administer the Death Estate and to secure and protect the same by, where appropriate, calling upon the Attorney as the former attorney to account for the dealings in relation to the Live Estate;

(g)     Though the Attorney owed fiduciary duties to the donor and the estate, after the demise of the donor the executors were the only person who could pursue legal action for the benefit and on behalf of the Death Estate;

(h)     In contrast with the position of a committee appointed under the Mental Health Ordinance Cap 136 (“MHO”), there is no provision in the Ordinance requiring a donee to render final accounts upon revocation and the First Order was not one for final accounts.  In any event, there was no need for final accounts to take the form specified in the First Order and there was no basis for final accounts to be provided to any interested party;

(i)     But a parallel could be drawn with a committee in that upon demise the power of a donee (like a committee) ceased by operation of law without any order.  In respect of order made during the lifetime of the donor, its implementation upon demise under the residual jurisdiction of the courts must turn on the facts of a case; and

(j)     In the present case, the steps for the appointment of auditor had not been completed by the time of death.  In such circumstances, the court could not proceed to choose and/or appoint the auditor under Section 11(1)(a) of the Ordinance.  The Judge also doubted if the court in exercising power under the Ordinance could wade into territory of the Death Estate which was to be administered by the executors.    

14.  In the Notice of Appeal, it was contended on behalf of the Plaintiff that the court still retains jurisdiction to order account in respect of periods prior to death and the First Order did not lapse or expire upon death of the donor.  It was also submitted that it would not be appropriate to leave the matter to the executors to investigate because the widow of the donor was incapacitated and the Plaintiff should not be deprived of the means to discover whether there had been breaches that need to be remedied.

15.  In his submissions, Mr Chan emphasized that the fiduciary duties owed by the Attorney did not cease or fall away even after the EPA had been revoked.  The starting point should be that the Attorney could be ordered to produce accounts for the affairs during the time when the Attorney acted as the attorney of the donor.  He also highlighted that the First Order was made at the time when the donor was alive.  Counsel stressed that revocation of EPA could take place for reasons other than the demise of the donor and the courts must retain the power to order accounts despite revocation. He drew support for his submissions from the decision of the State Administrative Tribunal of Western Australia in KS [2008] WASAT 29 at [28] to [34] and the Victorian Civil and Administrative Tribunal in DJB [2010] VCAT 280 at [47] to [49]. 

16.  On the other hand, Mr Whitehead SC (appearing with Ms Booth for the Attorney in this appeal but not below) supported the Second Order.  In their submissions, they agreed with the analysis of the Judge. Further, counsel drew attention to the fact that the duties owed by the Attorney under Section 12 of the Ordinance were owed towards the donor and, after his demise, to his personal representative.  In other words, the Attorney does not owe any fiduciary duty towards anyone else, including any interested party.  By reference to the general law on agency, Mr Whitehead also submitted that for acts done by the Attorney after the death of the donor she would incur personal liability to the third parties with whom she dealt in the purported capacity of agent, citing Bowstead & Reynolds on Agency 21^st Edn paragraph 10-016.

17.  Mr Whitehead further submitted that the agent’s fiduciary duties ended with the agency and therefore there was no ongoing duty to keep accounts or records. 

18.  With respect, we are unable to agree with the last submission of Mr Whitehead.  The authorities cited by him[1] only support the proposition that after the end of the fiduciary relationship the agent would not incur liabilities in respect of future acts as such acts could not constitute any breach of fiduciary duties like conflict of interests or engaging in competition with the principal.  But it does not mean that after he ceases to be a fiduciary an agent is free from the obligation to render account in respect of activities during the subsistence of fiduciary relationship. 

19.  The Judge also took the view that the Attorney remains accountable (even after the death of the donor) in respect of her administration of the donor’s properties during the time when she acted as attorney, see [11] (f) and (g) above.  The only issue is to whom such account should be rendered.  The Judge held that the Attorney would not be accountable to the Plaintiff as “interested party”.  Rather, the duty is owed towards the executors. 

20.  In so holding, the Judge was actually applying the principle that the fiduciary duty to account is owed to the donor and, after his death, to his personal representative. 

21.  Subject to what we shall say regarding the distinction drawn by the Judge between Live Estate and Death Estate, we agree with the Judge’s analysis.  Mr Chan’s submissions conflate the existence of fiduciary duty with the party to whom such duty is owed.   

22.  Whilst Section 11(1)(a) of the Ordinance permits an application for accounts to be made by an interested party, it is necessary to examine with care the nature of that jurisdiction.  In our judgment, that jurisdiction is not the same as the usual jurisdiction under the common law which could be invoked by a principal to seek an account from his agent. 

23.  Section 11 of the Ordinance sets out the special jurisdiction of the court in relation to enduring power of attorney.  Unlike the appointment of a committee under Part II of the MHO, the appointment of an attorney by an enduring power is made by the donor.  The statutory regime is intended to provide autonomy to a donor in choosing an attorney to administer his properties even if he were to lose mental capacity in the future.  Thus, the power of court to interfere with such appointment and the management of the properties by an attorney so appointed is more circumscribed than the court’s supervisory jurisdiction over a committee. 

24.  By virtue of the provisions in Part II of the MHO, in particular Sections 10A and 10B, the court has wide powers to make orders regarding the property and affairs of a mentally incapacitated person.  In contrast, the power under Section 11 of the Ordinance is limited and does not extend to the disposal of the property of a donor even in cases where he lost mental capacity.  In terms of the supervisory jurisdiction over an attorney, the power of the court under Section 11(1) of the Ordinance is confined to the making of a direction requiring the attorney to produce records and accounts and to revoke the enduring power of attorney or remove the attorney.  The court can also order the accounts to be audited.     

25.  It should be noted that such powers under Section 11 of the Ordinance are distinct from the power of the court under the common law to provide redress for breach of fiduciary duties by an attorney under a power of attorney (including enduring power of attorney).  For the exercise of the power under the general law of agency, as Mr Whitehead submitted, the only person who can pursue such remedies would be the principal. In addition, in cases of mental incapacity, his guardian ad litem or his committee (if such committee is appointed under Part II of the MHO) or after his death, his personal representative, may also pursue such remedies.  The common law powers have not been abrogated by Section 11 of the Ordinance.

26.  However, the position on locus standi to bring an application is different under Section 11(1) of the Ordinance because the statutory provision permits application to be made by an interested party. There is no definition for “interested party” in the Ordinance.  In the present case, it is not disputed that the Plaintiff was an interested party.

27.  But it has to be emphasized that the application should be made for the purpose of serving the interests of the donor instead of the personal interest of an interested party.  Given that the powers under Section 11(1) of the Ordinance are to provide safeguards for the interests of a donor of an enduring power of attorney, in an application under the sub-section the court should be guided by examining what should be done in the best interests of the donor in the circumstances.   

28.  The statutory powers under Section 11(1) of the Ordinance can therefore be invoked by an interested party when he or she has reason to suspect that the attorney had abused the authority granted under an enduring power of attorney and the donor is for one reason or another unable to hold the attorney to account.  There is however no requirement to show that the donor is under incapacity.  As the Australian authorities cited by Mr Chan illustrated, there can be cases where a donor is vulnerable even though he still has mental capacity. 

29.  The court must therefore exercise the discretion under that subsection in light of the circumstances of the case, always giving due respect for the autonomy of the donor and by reference to the interests of the donor and his wishes (insofar as such wishes can be ascertained).   

30.  One important consideration that the court should bear in mind is that the exercise of the powers under Section 11(1) of the Ordinance is prima facie an interference with a previous decision by the donor as to the person to whom he or she entrusted an unfettered power to manage or administer his or her properties.  Very often, these cases arise from disputes within a family and the personal dynamics between family members generate difficulties in the resolution of disputes by reference to who is right and who is wrong.  Notwithstanding so, the court must adopt a broad brush approach (in the same way as the exercise of its power under Part II of the MHO) in cases where there is objectively speaking reasonable cause for concern calling for intervention by the court.   

31.  An order for production of records and accounts necessarily impinges upon the right of privacy of the donor.  The court should be mindful of the interest of the donor in privacy.  It should consider the option of making an order for accounts to be rendered to the court without giving immediate access of such accounts to the interested party.  Disclosure of accounts to an interested party (who normally is not entitled to have access to such information and a donor with mental capacity may well have his own reason for withholding such information from the interested party) should only be made after careful consideration.  In light of such analysis, generally such a step should only be taken when disclosure to the interested party is necessary for further actions to be taken to safeguard the interests of the donor.

32.  It is therefore incorrect for Mr Chan to suggest that the Second Order deprived the Plaintiff of the means to discover whether there had been breaches that need to be remedied.  Such submission proceeds from the wrong premise that the power to order accounts is to serve the interest of the Plaintiff.  The court cannot assume that the interest of the Plaintiff is coterminous with the interest of the deceased donor.

33.  In our judgment, the power under Section 11(1)(a) of the Ordinance should not be exercised with a view to serve the purpose of an interested party.  Rather, a direction to provide records and account is to provide information to facilitate the court’s assessment on whether further steps are needed to intervene in the management of the donor’s properties to safeguard his interests.  If necessary, the court can resort to the power of revocation or removal under Section 11(1)(b) or (c) of the Ordinance or make an appointment of committee under Part II of the MHO.  The court can also enlist the service of the Official Solicitor when circumstances so require.  However, these steps can only be taken during the lifetime of the donor.   

34.  After the demise of the donor, there is no need for intervention in terms of removal or revocation since the enduring power is revoked by law upon death.  The court does not have the power to appoint a committee under the MHO after the death of a mentally incapacitated person.  Thus, after a donor has passed away, the court needs to identify other justification for making or implementing an order for account and the audit of the same. 

35.  Regarding investigation into past breaches of duties on the part of the Attorney, we agree with the Judge that this should primarily be a matter for the executors (and, if necessary, future administration action and other legal proceedings) to resolve instead of providing some pre-emptive discovery to an interested party (who may not have locus to take legal action on behalf of the estate and may not even be a beneficiary to the estate) through the mechanism of Section 11(1)(a) of the Ordinance.  If the Plaintiff can make good a case that the executors would not be performing their duties dutifully and properly, she should bring an administration action for change of legal representatives.  Such application could not be processed in the context of an application under Section 11 of the Ordinance.

36.  Further, there is a distinction between the production of records and accounts on the one hand and the auditing of the accounts on the other.  Auditing requires the appointment of a professional auditor.  Remuneration to the auditor has to be provided for.  This presents difficulty arising from the revocation of agency upon death of the donor.  As submitted by Mr Whitehead, the Attorney is not in a position to engage an auditor on behalf of the donor’s estate after his death.

37.  Though there was a provision for the payment of the remuneration of the auditor from the estate in the First Order which was made during the lifetime of the donor, we agree with the analysis of the Judge that upon the demise of the donor the administration of the estate should be left in the hands of the executors.  The special jurisdiction under Section 11 of the Ordinance does not provide for the court granting authority to an attorney to handle properties in the estate after the demise of the donor.  Nor does it confer jurisdiction on the court to order account to be given to an interested person for the purpose of the administration of the estate. 

38.  Thus, the Judge was correct in holding that the demise of the donor had an impact on the First Order and the court should consider if the First Order should be implemented in light of such development. It is not a question of whether the First Order has lapsed.  Instead, it is a question of deciding how the death of the donor affects the implementation of the First Order.  The Judge was also correct in holding that the court must have regard to the facts and circumstances of the case.  The Judge noted that in the present case, as the auditor had yet to be appointed, the court should stay the First Order. 

39.  In the two Australian authorities cited by Mr Chan, there was no discussion on the proper person who has the requisite locus after the demise of a donor to enforce the obligations owed to the donor prior to his death.  The judge in KS [2008] WASAT 29 only held that the court still retains jurisdiction to make an order for account after the demise of a donor in appropriate circumstances with proper reason established to justify the making of such order.  He did not discuss further as to what circumstances would be appropriate and how that power could be exercised at the behest of a person not having the authority to administer the estate.  The subsequent case of DJB [2010] VCAT 280 basically followed KS. 

40.  It should be noted that in the present case, in the Second Order the Judge stayed the First Order instead of discharging the same.  Hence, she did not rule that the court does not have jurisdiction to implement the First Order when it is appropriate to do so.  The Judge did not rule out the possibility that in future when it is shown to be appropriate to do so, on the application of a party having the authority to pursue the matter on behalf of the estate the stay could be lifted.

41.  Instead, she held that in the present circumstances, the Second Order should be made.  It seems to us that must be the right course to take in light of our discussion on the purpose of the Section 11(1)(a) power and the obvious need to hear from the executors (not only the Attorney) as to whether it is in the interest of the due administration of the Estate to implement the First Order requiring the estate to incur the costs of the auditing. 

42.  As discussed above, under common law a personal representative of a deceased’s estate (whether appointed by will or by a grant of letters of administration) could pursue investigations and seek legal redress on behalf of the estate against an attorney for breaches of fiduciary duties committed during the lifetime of a donor.  Such legal redress can include an order for accounts.  Hence, it may not be necessary for such personal representative to rely on Section 11(1)(a) or the First Order. 

43.  However, we can see that there can be cases where it is necessary to resort to the jurisdiction under Section 11 of the Ordinance after the death of a donor.  For example, in an action brought against the attorney after the death of a donor, the attorney may seek to rely on Section 11(3) of the Ordinance to seek relief.  As a matter of construction, we would hold that there is jurisdiction for the court to make an order under Section 11 of the Ordinance after the demise of a donor.  However, the court must have regard to the circumstances of the case to see if it is appropriate to exercise such power. 

44.  Though it would probably be rare, we would not rule out the possibility of the court finding it appropriate to exercise its jurisdiction under Section 11(1)(a) of the Ordinance after the death of the donor. 

45.  The issue in the present appeal is not whether the court has such jurisdiction but rather whether the Judge’s exercise of the discretion to stay the First Order is flawed.  This Court can only interfere when the Plaintiff can show that the exercise of discretion was wrong in principle or tainted by failure to take account of relevant matters or by wrongly taking account of irrelevant matters or otherwise plainly wrong. 

46.  Mr Chan failed to persuade us that there is any ground for our intervention with the Second Order.  Further, for the reasons canvassed above, even if we were to exercise the discretion afresh, we would have made the same order.   

47.  The only point we respectfully disagree with the Judge in her analysis is her reference to the estate of the donor as the Live Estate and Death Estate.  As a matter of law, there is only one estate and there is no need to split it into a Live Estate and a Death Estate.  The assets of and rights accrued to and liabilities incurred by the estate prior to death are carried forward under the same estate after death.  The only difference is that during lifetime the donor has the title and he and his agent, including the Attorney under the EPA has the power to deal with the estate.  After death such title and power is vested in the personal representatives. 

48.  However, reading the decision as a whole, the Judge’s reference to Live Estate and Death Estate was only made to emphasize that the Attorney ceased to have any authority to deal with the properties in the estate after death.  We do not think she fell into any error of law in the exercise of her discretion. 

49.  As regards Mr Chan’s submission that the matter should not be left in the hands of the executors as the Attorney is one of them and the wife of the donor is mentally incapacitated, the Judge did not fail to take that into account.  She referred to it at [32] of the judgment and held that the dispute on the Attorney’s suitability to act as co-executrix and the need to have some other person to act for the estate had to be resolved in the arena of probate and administration proceedings.  We agree with the Judge. 

50.  In the circumstances, we do not find any basis for disturbing the Judge’s decision.  The appeal is dismissed accordingly.

51.  We would not disturb the Judge’s order for costs at the court below.  We would direct counsel to lodge submissions on costs in the appeal.   

52.  Some costs were incurred in the appeal in respect of the disagreement between the solicitors on the service of notice of appeal. 

53.  On 24 January 2020, a clerk of Withers (“W”) the solicitors for the Plaintiff purported to serve the notice of appeal by leaving it with Hart Giles (“HG”), the solicitors acting for the Attorney in the court below.  At the time when the document was left, HG told the clerk that they had no instruction to accept service.

54.  On 29 January 2020, HG wrote to W informing them that they did not have instruction to accept service of the notice of appeal on behalf of the Attorney.

55.  W took the view that HG had instructions to accept service and wrote back to HG accordingly on 30 January 2020.

56.  Pausing here, it seems to us that whether a solicitor has instruction to accept service is a matter between the solicitor and his client.  As W and the Plaintiff were not privy to the communications between HG and the Attorney, and there was nothing set out in the letter of 30 January 2020 to provide any objective basis for refuting the information from HG, we do not see any basis for W to reply in the way they did on 30 January 2020.

57.  Despite that and HG’s reiteration on 13 March 2020 that they had no instruction to accept service, W proceeded with the prosecution of the appeal on the basis that the Notice of Appeal had been duly served and continued to serve documents in the appeal to HG.

58.  On 20 March 2020, the Attorney wrote from England (where she resided) informing the court that she acted in person and she had not given instructions to HG to act for her in the appeal.  It was also stated in the letter that HG had in fact forwarded the documents to the Attorney though they did not have instructions to accept service or to act in the appeal.

59.  The Registrar of Civil Appeals (“RCA”) directed W to comment on the question of service.  On 4 May 2020, W wrote to the RCA referring to the fact that HG were solicitors on the record acting for the Attorney in the court below.  By reason of Order 67 Rule 1(1), W regarded HG as solicitors on the record for the Attorney in the appeal as well.  Thus, W contended that service on HG as solicitors on the record was good service, citing Hong Kong Civil Procedure 2020, Vol 1 para 67/1/7.

60.  The Attorney wrote to the court on 2 June 2020 disputing the contentions of W.

61.  On 16 June 2020, the RCA wrote to the parties agreeing with W and directed the parties to proceed on the basis that the Notice of Appeal had been validly served. 

62.  HG and W lodged a joint checklist for the application to fix the date for hearing of the appeal on 30 June 2020.  The appeal was fixed for hearing on 27 November 2020 and notice of hearing was issued on 29 July 2020.

63.  On 3 August 2020, W took out a summons seeking “costs of and incidental of [the Attorney’s] attempt to suggest the Notice of Appeal was improperly served be to the [Plaintiff], to be summarily assessed and paid by [the Attorney] personally forthwith”.

64.  Apart from the fact that the parties had indicated in the joint checklist that there was no outstanding interlocutory application, as the appeal will be heard on 27 November 2020 there was no good reason for the Applicant to segregate the question of part of the costs of the appeal in this manner.  Such satellite application is not in line with Order 1A Rule 1(c).  Thus, the Court replied on 10 August 2020:

“ The Court will entertain submissions on costs of the appeal after hearing the appeal. Such submissions could seek different order for costs in respect of different parts of the proceedings in the appeal. As far as costs in respect of arguments on the service of the notice of appeal, the decision of the Registrar of Civil Appeals was not made in the context of any summons. As such, the costs pertaining thereto should form part of the costs of the appeal to be addressed after the determination of the appeal. It is neither appropriate nor necessary for the Plaintiff to issue a separate summons seeking costs on the arguments after the Registrar had given his decision. The summons of 3 August 2020 is dismissed accordingly.”

65.  Turning to the merit on the arguments on service, with respect to the RCA, we do not agree with W’s interpretation of Order 67 Rule 1(1).  The expressions “cause” and “matter” are defined in Section 2 of the High Court Ordinance Cap 4.  Cause means any action or any criminal proceedings.  Matter includes every proceeding not in a cause.  There are also definitions for “action” and “appeal”.  For the purposes of the High Court Ordinance Cap 4 and the Rules of the High Court Cap 4A, action and appeal are distinct sets of proceedings.  The definition of appeal is relevant:

“appeal in the context of appeals to the Court of Appeal in its civil jurisdiction includes—

(a) an application for a new trial; and

(b) an application to set aside a verdict, finding or judgment in any cause or matter in the Court of First Instance which has been tried, or in which any issue has been tried, by a jury;

66.  A civil appeal is not a cause since it is not an action.  As defined in Section 2, it is an application to set aside a judgment in any cause or matter in the Court of First Instance. 

67.  Whilst a civil appeal can be a matter, it is not the same matter as the action below.  The matter in the appeal is to set aside the judgment of the Court of First Instance.  The cause or matter in the Court of First Instance is concluded by the judgment in the action. 

68.  Thus, a new case number is assigned to each appeal and an appellant is required to pay the prescribed court fee when he launches an appeal.  It has also been held that the rules regarding originating motion apply to a notice to appeal: in AXA China Region Insurance v Leong Fong Cheng CACV 113 of 2016, 28 Oct 2016, this Court (Lam VP and Kwan JA) held that the requirement of a local address for service was applicable to a notice of appeal; in Lai v Ling [2017] 5 HKLRD 629 at [94], another division of this Court (Lam VP, Chu JA and B Chu J) held that the requirement of Order 11 on service of originating process outside jurisdiction is applicable to a notice of appeal.   

69.  Order 67 Rule 1(1) is only applicable in respect of the same cause or matter.  A solicitor on the record would not automatically be regarded as solicitor acting for the same party in another cause or matter. The reference to “the final conclusion of the cause or matter, whether in the Court of First Instance or the Court of Appeal” does not mean the appeal is the same cause or matter as the proceedings in the Court of First Instance.  It only means that the deeming effect is equally applicable if the matter is an appeal.  The expression “former solicitor” in the rule should be construed to mean former solicitor in the cause or matter in question. 

70.  The provisions in Order 67 Rules 5 and 6 do not take the analysis further.    

71.  Though Mr Chan initially took another position, he did finally accept that an appeal is a separate set of proceedings.

72.  It therefore follows that Order 67 Rule 1(1) could not deem HG to be solicitors as solicitors on the record for the appeal.

73.  We understand that it is common practice for solicitors to serve a notice of appeal on those acting for the other party in the court below and in many cases such service is accepted as adequate service by the other party.  However, such common practice (which on proper analysis can only be based on conventional goodwill amongst solicitors) cannot prevent a party from taking the stance that the appeal is a new matter and he has not given instructions in the appeal to the firm previously acting for him in the Court of First Instance. 

74.  It is not unheard of that a party may instruct a new firm of solicitors in an appeal.  It is also common practice that solicitors asking for costs on account in proceedings in the Court of First Instance would not include costs for the appeal.  If the litigation is funded by legal aid, the authority for such funding would, according to our experience, usually end upon the conclusion of the proceedings in the Court of First Instance.  A litigant has to apply afresh for legal aid in respect of an appeal.

75.  Once a party (or as in the present case the solicitors on record in the action below, viz HG) intimated that the solicitor did not have instructions to act in the appeal, the appellant has to effect service by another means instead of relying on the common practice.    

76.  We are therefore of the view that it was within the right of the Attorney to withhold instructions to accept service of the notice of appeal.  HG acted properly in intimating to W that the firm had no instructions to accept service.

77.  In so saying, we are not saying that the appeal is incompetent.  The Attorney eventually did have notice of the notice of appeal as it had been passed to her by HG.  Further, as pointed out in the course of the hearing, in light of the direction by the RCA the parties have proceeded on the basis that the notice of appeal had been validly served.  In such circumstances, irrespective the correct analysis, whatever defects there were in respect of service of the notice of appeal must have been waived.  We have no doubt that the appeal was properly constituted before us.

78.  We also wish to emphasize that our analysis of Rule 67 Rule 1 should not be taken as encouragement to a litigant to evade service for the purpose of appeal.  If there is evidence of such evasion of service, the court does have the power to make an order for substituted service including a mode of service within jurisdiction which the court has reason to believe will be effective for bringing the appeal to the attention of that party, see Deutsche Bank v Zhang Hong Li [2016] 3 HKLRD 303.  Also, if the costs for service of a notice of appeal were increased due to the unreasonable conduct of a respondent, the court can take that into account in deciding the appropriate costs order in the appeal.    

79.  In the present appeal, we need to address the issue of service because of Mr Chan’s submissions on costs.  For the reasons given above, we are of the view that there is no basis for segregating the costs concerning the argument regarding service from the general costs of the appeal. 

80.  We direct the Attorney to lodge and serve written submissions on costs (not more than 5 pages) within 14 days from the handing down of this judgment and the Plaintiff to lodge and serve their reply submissions (not more than 5 pages) within 14 days thereafter.